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CAA Partners Sign 5-Year Deals as TPG Ups Stake

The investor increased its stake in the agency from 35 percent to 53 percent, partly in response to WME's ballooning size thanks to its May acquisition of IMG

This story first appeared in the Oct. 31 issue of The Hollywood Reporter magazine.

It took a rival's big move for TPG Capital to step up its commitment to CAA. On Oct. 20, the private-equity firm increased its stake in the agency from 35 percent to 53 percent — partly in response to WME's ballooning size thanks to its May acquisition of IMG, according to a source with knowledge of the deal.

Majority-owned by an outside company for the first time, CAA is expected to retain its management team led by president Richard Lovett, with the seven partners each extending their contracts by five years. CAA, valued at $1.1 billion, will apply TPG's $225 million equity infusion broadly across its businesses, which in addition to entertainment and sports representation include a growing corporate marketing practice, a technology venture fund and an investment bank.

CAA's growth beyond a traditional Hollywood talent agency positions it for an eventual sale, say observers, or, more likely, a public offering. But Texas-based TPG, whose relationship with the agency began in October 2010, still isn't looking for a quick exit. The added investment is intended to help CAA stay competitive with the Silver Lake Partners-backed WME, build on its foundation and develop more growth engines, similar to what it has done with CAA Sports. That will take a few years — during which time the combined WME-IMG could go public first, predicts one source, who calls the new CAA deal "patient capital." Adds the source, "This is a relationship between people that already know each other well, so they have some pretty well-thought-out plans."